Why rural areas can't catch a break on speedy broadband

This is part of CNET's "Crossing the Broadband Divide" series exploring the challenges of getting internet access to everyone.

When Galen Manners was offered a promotion at his job, he didn't want to relocate to the big city from his family in rural Kansas, where he helped his two brothers run their 2,000-acre farm in his spare time.

Shara Tibken/CNET

His employer gave him the option to work from home. But there was one problem. There was no high-speed internet access to remotely connect him to the company's headquarters, more than 300 miles away in Little Rock, Arkansas. So Manners, who had worked for a small wireless provider, built his own broadband network.

"I networked cell towers for a living, so I figured I could do the same thing for myself," he said.

Manners cobbled together his network using a dedicated connection from a phone company in the closest "city": Parsons, Kansas, population 9,000. He rented rooftop space on an eight-story building, one of the tallest in town, and engineered a private wireless network using a cell tower he had erected on his family's farm.

Soon his cousin down the road asked if he could be connected to the network. Then a neighbor on the next farm wanted connectivity. By the time he connected 20 relatives and neighbors, a business was born. Manners started Wave Wireless in 2000. Since then, the small provider has grown to serve 2,500 customers, including the parents of Federal Communications Commission Chairman Ajit Pai, who were customers before moving away from the Parsons area.

Galan Manners, president and founder of Wave Wireless, provides broadband via fixed wireless service to 2,500 customers in rural Labette County, Kansas.

Galen Manners

Manners' small wireless internet service provider isn't uncommon. It's estimated there are about 2,000 companies providing fixed wireless broadband access across all 50 states, serving an average of 1,200 customers each, according to Wireless Internet Service Providers Association, or WISPA.

They're part of a solution to a critical problem facing the US -- delivering broadband services to millions of rural Americans who don't have access in their homes, farms and businesses. With broadband having become as essential as running water and electricity to improving people's daily lives and providing a standard of living equal to that of urban and suburban parts of the country, policy makers are working together to close the connectivity gap.

Pai said that what gives people hope in rural America is the "promise of digital opportunity."

Broadband is a game changer for rural America.

Ajit Pai, chairman, FCC

"Broadband is a game changer for rural America," he said in an interview. Pai, who has traveled to 41 states since taking office in January 2017, said federal and state authorities need to have the same sense of mission they had back when they made a priority of providing electricity to every American.

"I see it is as an echo of the rural electrification efforts we saw in the 1930s, almost 100 years ago," he said.

At stake isn't just whether someone in rural Arkansas can watch cat videos on YouTube or check Facebook. It's about whether rural communities can survive.

In previous generations, communities thrived based on their proximity to infrastructure like roads, railways, airports and rivers to distribute goods. Today, it's about having access to reliable, affordable high-speed internet. Communities without access will simply wither and die, says Jonathan Chambers, a former FCC official and partner at the Washington-based consulting firm Conexon, which works with electric co-ops looking to deliver rural broadband service.

"People will vote with their feet and move away from places that do not provide high-speed internet access," he said. "They will leave, and that community will not survive."

The problem

In spite of the billions of dollars in private investment and government subsidies over multiple decades, the numbers still paint a disturbing picture. Roughly 39 percent of rural Americans lack access to high-speed broadband, compared with just 4 percent of urban Americans, according to a report from the FCC using 2016 figures.

The internet that rural Americans can access is slower and more expensive than it is for their urban counterparts. And to add insult to injury, the rural population generally earns less than those in urban areas.

Building networks in rural America is incredibly expensive, and in some places it's nearly impossible. The terrain can be a problem in areas like West Virginia, nestled among the Appalachian, Allegheny and Cumberland mountain ranges. In Alaska or Minnesota, the ground could be frozen for more than half the year, making it nearly impossible to install fiber or other infrastructure.

But the biggest barrier to getting broadband in certain areas of the country is low population density. Broadband providers simply won't offer service if they can't get enough customers to pay for it. In sparsely populated areas like Cass County, Iowa, where my CNET colleague Shara Tibken was born and raised, residents may see internet speeds of 5 megabits per second, a far cry from the 25 Mbps speeds the FCC defines as broadband.

"The challenge in rural areas is it's just not economical for private parties to invest there," said Doug Brake, director of broadband and spectrum policy at the Information Technology and Innovation Foundation.

In places like Alaska, the ground can be frozen for half the year, limiting the amount of time crews have to install broadband infrastructure.

Jean-Erick Pasquier

Even as progress is made to get rural America connected, the disparity between the haves and have-nots in terms of speed and network quality is likely to get worse. Big broadband providers will focus on the more densely populated and profitable areas of the country, delivering gigabit speed broadband -- often from not just one provider but from multiple companies. The advent of 5G wireless, which promises to bring increased speeds and network responsiveness, is also unlikely to reach rural communities.

"Market forces are what will drive the deployment of 5G," said Blair Levin, who oversaw the FCC's National Broadband report in 2010 and who served as chief of staff to Clinton-era FCC Chairman Reed Hundt. "The 5G economics are very different than they are for 4G. And cities, because of their density, are in a much better position to drive 5G deployment than rural communities."

In Cass County Iowa, where CNET's Shara Tibken grew up, you're lucky if you can get internet connections with downloads of 5 Mbps.

The issue has also been taken up by President Trump, who has gotten much of his political support in areas where broadband is hard to come by. His infrastructure proposal this year called for $50 billion in rural spending, including on broadband, but so far neither his budget nor the Republican Congress have allocated additional funds for rural broadband deployment.

At a Senate Commerce Committee hearing in early October, Democrats and Republicans were critical of cuts the FCC has made to a program funded through its Universal Service Fund, which reimburses some of the costs for phone companies offering broadband in rural communities. Committee Chairman John Thune, a Republican from South Dakota, called the FCC's cuts to this funding "simply unacceptable."

Montana Senator Jon Tester takes a photo with constituents. During a Senate oversight hearing, Tester complained about the inaccuracy of the FCC's wireless and broadband maps. "They stink," he said.

William Campbell

"The FCC's failure to ensure sufficient and predictable funding jeopardizes the vitality of America's rural communities," he said. Thune said Pai had committed to conducting a "thorough economic analysis on the impact of ... funding cuts on broadband deployment in rural areas." But he said that no analysis has occurred and that cuts had increased by almost 25 percent.

Sen. Amy Klobuchar, a Democrat from Minnesota, echoed Thune's frustration, saying cuts to the program were "preventing new broadband deployment and driving up prices for our customers."

In response to the hearing, Pai has blamed the previous FCC, which was led by Democrats, for some of these issues. And he said he hopes to resolve the concerns about the budget cuts by the end of the year.

Then there are the maps, which are supposed to identify where broadband and wireless service does and doesn't exist so the FCC can ensure it doesn't subsidize network build-outs in areas that already have coverage.

Cutting red tape

So what has the FCC been doing? The Republican-led agency has taken a three-pronged approach to the issue: cutting regulation to spur investment, encouraging cheaper technology alternatives and finding more efficient ways to allocate subsidies.

But experts like Brake say the agency has leaned more heavily on cutting regulatory red tape, which has drawn criticism.

Pai argues that if the FCC limits the fees that big cities can charge wireless companies to deploy their 5G infrastructure, these carriers will be more willing to plow that money into rural broadband. But critics like Levin called this a false premise and said the FCC's move does nothing more than strip local communities of negotiating power.

"Saving money in New York of Los Angeles has zero impact on investment in Montana," he said. "If it worked that way, we'd have already solved the rural broadband deployment problem."

Pai also says his agency's repeal of the Obama-era net neutrality rules is making it more attractive for broadband companies of all sizes to invest in expanding their networks, which he says will spur investment in rural communities.

"Absolutely, we've seen some very positive initial evidence that this is working," he said in an interview.

FCC Chairman Ajit Pai has traveled to 41 states talking to people about the digital divide in rural communities. On one of those trips, he met with farmers in Idaho.

FCC

He cites VTel Wireless, a mobile carrier serving rural Vermont and parts of New Hampshire, as an example. The company sent a letter to the FCC saying that the repeal of the net neutrality rules gave it the confidence to invest $4 million in upgrading its 4G LTE network.

Last week, he pointed to an industry report from USTelecom, which had opposed the 2015 net neutrality rules and is suing the state of California over its own proposed net neutrality protections, saying that investment is up over the past year as a result of Pai's deregulatory policies.

But his Democratic colleague on the FCC, Commissioner Jessica Rosenworcel, disagrees with these changes.

"The argument is that we will see more deployment in rural locations," she said in an interview. "But I don't believe that we have evidence that suggests that's happening. Instead, what we have are more companies with more rights to block and censor content online, and that's not good for any of us."

Analysts say that cutting regulatory red tape will only take things so far.

"Even if you make it cheaper to deploy and invest in the network, if you can't sustain a business because the population density is too low, it doesn't really matter," Brake said.

Everyone is hyping 5G, but Blair Levin, a former FCC official, said it's unlikely wireless companies will find a business case to deploy the technology in rural areas.

Marguerite Reardon/CNET

Tried and true technology

For decades, much of the work the FCC has done in getting broadband to rural America has centered on providing subsidies and incentives to traditional phone companies. Most Americans, including those living in rural parts of the country, rely on various flavors of fixed broadband infrastructures, such as DSL or cable modem service. The lucky few are able to get access to fiber, which is considered the gold standard in broadband because it provides near limitless capacity.

But pushing fiber closer to customers or directly to their door is expensive. An FCC report authored by Paul de Sa, former chief of the FCC's Office of Strategic Planning and Policy Analysis under then-FCC Chairman Tom Wheeler, estimated it would take $40 billion to expand internet access to cover 98 percent of Americans and another $40 billion to deliver broadband to 100 percent of the US population.

Cheaper alternatives

While fiber is the ideal, it's unlikely Congress will come up with an additional $40 billion to $80 billion to pay for it. That's where wireless comes in.

Wireless 4G LTE and even 5G could replace broadband in some places. But wireless technologies aren't without issues. 5G, which needs hundreds of radios to cover relatively short distances, is likely prohibitively expensive to make sense for rural areas. And wireless still needs fiber connections to offload traffic.

The most useful forms of wireless for rural are fixed wireless links, like the ones offered by companies such as Manners' Wave Wireless. These links generally use unlicensed spectrum at high-frequency ranges to transmit signals from one point to the next. There are technical restrictions for these links, such as the need for radios to have line of sight to each other, and interference issues like trees or mountains.

Wave Wireless, a small wireless internet service provider in Labette County, Kansas, wants access to licensed wireless spectrum to improve speeds and reach more customers.

Galen Manners

There's also the use of unlicensed TV broadcast spectrum called white spaces. Microsoft, which holds several royalty-free technology patents for using this spectrum, announced a program in July 2017 to connect 2 million people in rural America by 2022 through partnerships with telecom companies. The company promised to have 12 projects up and running in 12 states in the next 12 months.

The FCC has set rules for the use of white space spectrum and established an administrator of a national database to identify channels that can be used by devices accessing the shared spectrum. But there have been problems with the database's accuracy, and there's not yet an ecosystem of devices, which means it could be a while before the technology is widely used by consumers.

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And then there's satellite. While satellite broadband access can blanket large swaths of the globe, the technology is expensive and the connection is slow, largely due to the lag time that results from its trip from space.

But low Earth orbit satellites could be changing this. These satellites operate significantly closer to users, which reduces the lag time, known in the industry as latency. They're also less expensive to deploy. Companies such as Google, Facebook, Boeing, SpaceX and Virgin have experimented with this technology.

The FCC has been trying to free up spectrum for satellite services and modify its rules to allow for more low orbiting satellites to be launched.

Where to invest

The FCC distributes roughly $8 billion a year in subsidies as part of its Universal Service Fund to help offset the cost of deploying broadband in rural America.

Traditionally, much of this money has gone to phone companies to upgrade their existing copper lines for broadband. But as part of its effort to modernize its universal service programs, the FCC conducted its first-ever reverse auction to allocate funds in a technology-agnostic way. While the reverse auction accounted for only a small fraction of the total funds available -- just $1.5 billion -- many considered it a step in the right direction in terms of matching government funds with broadband providers who would actually deliver service. Pai noted it saved the agency $500 million.

"We are trying to make sure these dollars, which are scarce, are stretched as far as possible," Pai said.

He also noted that the auction was designed to encourage new players to bid. Indeed, the biggest winners were wireless ISPs, and rural electric companies, many of which are using their existing utility infrastructure to deploy fiber, were the second largest winners in the auction.

"The fact that there are a variety of different winners speaks to the fact that we were technologically neutral," he said.

Spectrum policy

One of the FCC's most powerful weapons is its ability to allocate public airwaves, or the spectrum that's critical to any wireless network. But how it allocates the spectrum can have huge consequences.

Take for example, rules for the upcoming auction of spectrum in the 3.5 GHz band known as Citizens Broadband Radio Service (CBRS) spectrum. Rural providers of fixed wireless internet, like Wave Wireless, are eying the spectrum because it can cover wider areas and offer higher speeds.

Fixed wireless service may be a more cost effective alternative to fiber for providing broadband to rural communities, especially in places where the number of livestock per square mile may outnumber humans.

Wireless Internet Service Providers Association (WISPA)

In 2015, rules were established that allocate licenses in smaller census tracts, making it possible for smaller players to bid on licenses.

But after two years of developing the technical standards for the use of the spectrum, Pai's FCC reopened the rules last October and proposed increasing the size of the licenses, making them more attractive to large wireless companies like AT&T, Verizon and T-Mobile.

The proposed changes have pitted small wireless ISPs that want to use the spectrum to expand their coverage in rural areas against large mobile carriers that say they need the spectrum to deliver 5G service. But those larger players are more concerned with urban and suburban areas.

The FCC is expected to vote to accept the changes at its Oct. 23 meeting.

Claude Aiken, president and CEO of WISPA and a former FCC official, said he's concerned the FCC's actions will slow wireless broadband in rural areas. He said the CBRS band – and other midband airwaves – are "the best opportunities we will see in a generation to address" the rural broadband access problem.

Wave Wireless' Manners said the licensed midband spectrum is necessary to allow his business to expand service to more customers and to deliver better speeds. In the rolling hills of the southeastern corner of Kansas near Branson, Missouri, where he operates his service, the terrain isn't always conducive to the higher-frequency, unlicensed spectrum he's traditionally used.

"We need access to good midband spectrum that we can afford," he said. "Otherwise the big players are going to gobble it up for mobile use, it'll sit underutilized, and rural America won't be able to get access to any of it."